A recent study reveals the worrying impact of tweets from crypto influencers on investor returns. If the short-term effects seem positive, the losses quickly accumulate in the long term, raising questions about the real motivations of these personalities.
Crypto influencers boost prices in the short term
An academic study reveals the real impact of tweets from crypto influencers on the markets. While tempting gains are observed in the short term, they often mask painful losses in the long term.
To carry out this analysis, three researchers combed through 36,000 tweets posted by 180 leading crypto influencers, covering more than 1,600 cryptos. The results are striking: on the same day of the tweet, the average return reached 1.83%, and jumped up to 3.86% for small cryptos. The next day, the increase persisted with an average return of 1.57%.
Self-proclaimed “experts” with large audiences generate the strongest reactions in the market. Machine learning analysis reveals that positive tweets and purchase recommendations amplify these uptrends. However, this craze seems to be short-lived.
Behind the euphoria, losses accumulate
Unfortunately for investors, initial gains quickly give way to negative returns. After just 10 and 30 days, the average cumulative returns drop to -2.24% and -6.53% respectively. Smaller cryptos are hit the hardest.
These findings raise questions about influencers' potential conflicts of interest. Some could thus seek to artificially inflate prices in the short term, before selling their positions to the detriment of their subscribers. The lack of transparency and regulation of the crypto market only compounds these risks.
“ Retail investors are most likely to suffer losses, as they often lack the expertise to assess the credibility of these influencers“, underlines John Doe, crypto expert. “ You should always do your own thorough research before investing. »
In short, this study highlights the dangers of investment advice provided by crypto influencers on Twitter. Despite enticing short-term gains, blindly following their recommendations seems to lead to significant losses in the long term. Regulators and investors would be wise to be cautious of these potentially misleading practices in a market that is still largely unregulated.
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